TheWolf
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15/07/05 EURGBP
15/07/05
Here above is the EURGBP H4 graph. I normally don't deal with EURGBP, but here, we can see a clear Head and Shoulders pattern- a big shorting opportunity. (pic above -red arrows indicating heads and shoulder)
Now let us have a look at the graph above^. The resistance is shown with the red line at 0.6910. I have therefore put a stop loss at 0.6920 in case of a false breakout. A similar resistance can also be shown in the daily chart, confirming shorting opportunity There is a possiblility that it will go down to around 0.6600, where the support is, therefore there is a nice risk/reward ratio.
You can also see that the channel (in yellow) is broken, confirming that the uptrend is broken.
You can see on the graph that I also use the Force Index. This is an oscillator, which gives indication of a forthcoming turning point. As shown from the white arrows, there is a bearish divergence, i.e. the price and the indicator diverge. This is a powerful signal indicating that the bulls are getting weaker, and a turning point is near. Similarly, the Bollinger Bands (in blue) are getting narrower, again indicating that a turning point is near. Lastly, the Stochs also show a bearish divergence, but this time, it is a triple divergence (ie 3 lower lows as shown in the graph), which is a more powerful than a normal divergence cosisting of 2 lower lows. The best sell signals occur when the first top of Stochastic is above and the second below the upper reference line. This is clearly the case.
I have also done a small Ichimoku analysis, which suggest that the bearish signals might not be as significant as I hoped. One worry is the thickness of the Cloud, as you can see below. The thick cloud suggests a strong support, preventing penetration into the cloud. The bearish cross is above the cloud, which loses its significance.
We'll see, perhaps the Euro Inflation news will act in my favour, strong enough to break the cloud. This is a long term trade, I would expect around 1-2 weeks before taking in profits. If the indicators suggest a retracement, I will change my strategy and take early profits or introduce a trailing stop, depending on the circumstance.
Profit/Loss: Got stopped out.
Lesson:
(1) Only enter short when the support has been broken
(2) Don't trade against the long term trend
15/07/05
Here above is the EURGBP H4 graph. I normally don't deal with EURGBP, but here, we can see a clear Head and Shoulders pattern- a big shorting opportunity. (pic above -red arrows indicating heads and shoulder)
Now let us have a look at the graph above^. The resistance is shown with the red line at 0.6910. I have therefore put a stop loss at 0.6920 in case of a false breakout. A similar resistance can also be shown in the daily chart, confirming shorting opportunity There is a possiblility that it will go down to around 0.6600, where the support is, therefore there is a nice risk/reward ratio.
You can also see that the channel (in yellow) is broken, confirming that the uptrend is broken.You can see on the graph that I also use the Force Index. This is an oscillator, which gives indication of a forthcoming turning point. As shown from the white arrows, there is a bearish divergence, i.e. the price and the indicator diverge. This is a powerful signal indicating that the bulls are getting weaker, and a turning point is near. Similarly, the Bollinger Bands (in blue) are getting narrower, again indicating that a turning point is near. Lastly, the Stochs also show a bearish divergence, but this time, it is a triple divergence (ie 3 lower lows as shown in the graph), which is a more powerful than a normal divergence cosisting of 2 lower lows. The best sell signals occur when the first top of Stochastic is above and the second below the upper reference line. This is clearly the case.
I have also done a small Ichimoku analysis, which suggest that the bearish signals might not be as significant as I hoped. One worry is the thickness of the Cloud, as you can see below. The thick cloud suggests a strong support, preventing penetration into the cloud. The bearish cross is above the cloud, which loses its significance.
We'll see, perhaps the Euro Inflation news will act in my favour, strong enough to break the cloud. This is a long term trade, I would expect around 1-2 weeks before taking in profits. If the indicators suggest a retracement, I will change my strategy and take early profits or introduce a trailing stop, depending on the circumstance.
Profit/Loss: Got stopped out.
Lesson:
(1) Only enter short when the support has been broken
(2) Don't trade against the long term trend
